PRESIDENT Rodrigo R. Duterte has approved the government’s new export development plan, short of a year after it was submitted to his office by the Cabinet Economic Development Cluster, providing a road map for improved performance of both service and merchandise exports at a time of challenging global demand conditions.

Malacañan Palace on Monday released Memorandum Circular No. 62, dated June 26, on Mr. Duterte’s approval of the Philippine Export Development Plan 2018-2022 and which requires agencies concerned to submit within 60 days of the circular’s effectivity to the Export Development Council (ExDC) and the Office of the President an inventory of relevant policies, programs and plans. “These agencies shall implement such policies, programs and action plans to boost export growth and ensure the free flow of goods…” the circular read, adding that the ExDC will conduct biannual review of the PEDP 2018-2022.

The new export development plan aligns more closely to the larger Philippine Development Plan that set the Duterte administration’s six-year socioeconomic development track.

Endorsed for Mr. Duterte’s approval on July 20 last year, the PEDP 2018-2022 targets total export revenues — consisting of goods and services — to reach $122-130.8 billion by 2022, when he ends his six-year term, from $74 billion in 2016.

That target entails a compound annual growth rate of 8.89-9.96%.

Export of goods are targeted to post a 6.11-6.46% CAGR to $61-62.2 billion in 2022 from $42.7 billion in 2016, while services are projected to post an 11.78-13.99% CAGR to $61-68.6 billion from $31.2 billion in 2016.

Those targets compare with actual total export growth rates of 8.13% in 2006-2012, 6.17% in 2012-2014 and -0.88 in 2014-2016, taking 2006-2016 growth to 5.88%.

That overall slowdown is reflected in the performance of merchandise exports in the same periods (7.1% in 2006-2012, 3.64% in 2012-2014 and -7.39% in 2014-216, taking 2006-2016 growth to 3.35%) as well as of services (10.17% in 2006-2012, 11.69% in 2012-2014 and 10.73% in 2014-2016, taking 2006-2016 growth to 10.95%).

Merchandise export sales dropped 1.8% to $67.488 billion last year from $68.713 billion in 2017, which had seen an increase of about a tenth, coming from a 2.42% drop in 2016. The four months to April saw foreign sales of Philippine goods fall by 2.1% to $21.921 billion, as electronic products which accounted for more than half of total merchandise shipments slipped by 0.6% to $11.948 billion.

Service exports, on the other hand, grew, but at a slower 8.9% pace last year, compared to 15.1% in 2017 and 15.3% in 2016.

The government has adopted three strategies to achieve these targets.

The first strategy is to improve the overall climate for export development by removing regulatory impediments, enhancing trade facilitation, and fostering supply chain linkages.

Second is to exploit existing and prospective opportunities from trading arrangements, while the third involves development of comprehensive packages to promote select products and services.

Based on historical experience, the government identified three general product categories “with potentially wider spread and impact due to comparative advantages or in meeting global challenges”, namely: electronics; processed food, vegetables and beverages; and information technology.

“This does not mean three homogeneous products or services since obviously each one can be further broken down to many sub-products and related services,” the PEDP explained.

That focus compares to 10 product and service categories under the previous PEDP 2015-2017, which focused on diversifying markets and products, identifying and developing export capabilities where global market demand is growing fast, addressing bottlenecks that undermine export competitiveness as well as developing the potentials of goods and services where the Philippines could be competitive but have yet to attain comparative advantage.

“The different approaches followed by PEDP 2015-17 and PEDP 2018-22 are mutually reinforcing,” according to the new plan, explaining that “PEDP 2018-22 takes off from the analytical foundation of PEDP 2015-17 which remains valid for investigating the structural reasons for the weak performance of Philippine exports of goods and services.”